Circular 205/2013/TT-BTC: When to Apply the Agreement and Tax Law?

17:57, 10/07/2024

This is a notable content mentioned by the Ministry of Finance in Circular 205/2013/TT-BTC providing guidelines on the basic contents of the Agreements on the avoidance of double taxation and the prevention of tax evasion concerning income and property taxes between Vietnam and other countries and territories (hereinafter collectively referred to as Contracting States or countries depending on the context) effective in Vietnam (hereinafter referred to as Agreements).

Circular 205/2013/TT-BTC stipulates the application of treaties, tax law, and related laws in the following cases:

application of double taxation treaty, tax law, Circular 205/2013/TT-BTC

Source: Internet

- In the event of discrepancies between the provisions in the Treaty and the provisions in the domestic tax law, the provisions of the Treaty shall prevail.- The Treaty shall not create new, different, or heavier tax obligations compared to domestic tax law. In the event that the Treaty prescribes that Vietnam has the right to tax a certain type of income or tax at a specific rate but the current tax law in Vietnam does not have provisions for taxing that income or prescribes a lower tax rate, the current provisions of Vietnamese tax law shall apply, meaning no tax or a lower tax rate shall be applied.- When Vietnam implements the provisions of the Treaty, if there are terms not defined in the Treaty, the undefined terms shall have the meanings as prescribed by Vietnamese law for tax purposes at that time. For a term not defined in the Treaty and either not defined or simultaneously defined in both Vietnamese law and the law of the Contracting State with Vietnam, the competent authorities of the two countries shall resolve the issue through bilateral agreement procedures. For a term simultaneously defined in both tax law and other laws, the definition in tax law shall be applied to implement the Treaty.

More details can be found in Circular 205/2013/TT-BTC, effective from February 06, 2014.

Thu Ba

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